Standing Committee B

[Mr. Roger Gale in the Chair]

Proceeds of Crime Bill

Clause 255 - Restrictions on dealing etc. with property

Roger Gale: Good afternoon, ladies and gentlemen. Your festivities can start at 7 o'clock. However, before then we have quite a few clauses to get through.

Bob Ainsworth: I beg to move amendment No. 311, in page 149, line 16, leave out
'in relation to recoverable property'.

Roger Gale: With this it will be convenient to take Government amendment No. 406.

Bob Ainsworth: The amendment introduces a slight change to subsection (6). Amendment No. 406 makes the same change to clause 263, which applies to Scotland. Clause 255 sets out provisions on exclusions that the court may make in an interim receiving order to allow dealing with property to which the interim receiving order applies. Clause 263 does the same in respect of Scotland. Property that may be subject to an interim receiving order or an administration order may be recoverable property or associated property. Exclusions may be made under clauses 255 and 263 in respect of both recoverable and associated property.
 Subsection (6) currently sets out a proviso to the power to make exclusions, which is that the court must exercise the power with a view to ensuring that, as far as practicable, the rights of the director or Scottish Minister to recover property are not unduly prejudiced. As currently defined, however, the proviso applies in respect of recoverable property only, not associated property. 
 It is less likely that an exclusion in relation to associated property would prejudice the right to recover than an exclusion in relation to recoverable property, but it could be the case. It would therefore be reasonable to require the court to consider whether any exclusion applying to associated property would unduly prejudice the right of enforcement in the same way that, as the Bill is currently drafted, it would have to consider that in respect of recoverable property. 
 The amendment will mirror the provisions under clauses 257(2) and 264(2), which provide that associated property may be excluded from the terms of an interim receiving order or an administration order entirely, if the court thinks that the satisfaction of any 
 right to recover the property will not be unduly prejudiced. It will not prevent the court from making exclusions in respect of associated property. It will ensure that, when taking decisions, the court considers all the relevant factors.

Dominic Grieve: The amendment, although itself minor and presented by the Minister as a minor matter, is of considerable importance. I am not sure why the draftsman and Minister were content with the existing wording of clause 255(6) but have now decided that it is no longer sufficient. The hon. Gentleman highlighted the difference between recoverable and associated property. Associated property is property into which recoverable property has become mixed or in some way associated. It will include property that belongs to another person and will not be subject to recovery. At the preliminary stage, the court must carry out an exercise to balance the need to ensure that the state may recover what it is seeking with the rights of the individual who will be adversely affected.
 As we discussed this morning, there are areas in clause 255 in which we explored the balance that should exist regarding individuals' rights in the face of a receiving order. Clause 255(6), as amended, will substantially shift the balance on actions relating to exclusions toward the state and away from the rights of the individual—specifically, the innocent individual who has an interest in the associated property. I concede that it is just possible that such an individual may have recoverable property and be culpable. However, the chances are that he will be an innocent party. 
 The amendment is quite minor, but it would extend the statement, with which I cannot possibly take exception, that the satisfaction of any interest or right of the enforcement authority to recover recoverable property must be paramount, to a paramountcy on the balance when the state might be prejudiced if the rights of a person with an interest in the associated property were adversely affected. 
 Clause 255(6) states: 
 ''The power to make exclusions in relation to recoverable property''— 
we are taking that out— 
''must be exercised with a view to ensuring, so far as practicable, that the satisfaction of any right of the enforcement authority to recover the property obtained through unlawful conduct is not unduly prejudiced.'' 
The exclusion of associated property clearly implied that it was accepted that it might be necessary to prejudice the rights of the enforcement authority if that was required to support the rights of the associated property owner. 
 The Minister has not explained why this change of heart has occurred. I shall be grateful if he does because, at present, I am minded to oppose the amendment.

Bob Ainsworth: I did not think that I was insisting that the rights of the enforcement agency would be paramount in the case of associated property. As I said, I thought that the amendment would allow the
 court to take that into consideration. I hope that the hon. Gentleman will accept that that is sensible, and that he will not think that the rights of the enforcement authority can be ignored in every case of associated property.

Dominic Grieve: Perhaps the use of the word ''paramount'' is an exaggeration.
 We discussed how undesirable it was to fetter judicial discretion. Clause 255(6) tells the courts how they should exercise their discretion when making exclusions. Previously, they were told that their discretion should be fettered in relation to recoverable property only, but now it must be fettered in relation to associated property, and the courts must act in a way that is in favour of the enforcement authority and against the individual who may be adversely affected if an exclusion order is not made.

Bob Ainsworth: The hon. Gentleman is retreating from the word ''paramountcy'', but he is still insisting on a slant that is not justified by the wording of clause 255(6), which states:
 ''The power to make exclusions in relation to recoverable property''— 
the amendment would extend the power to all property, whether recoverable or associated— 
 ''must be exercised with a view to ensuring, so far as practicable, that the satisfaction of any right of the enforcement authority to recover the property obtained through unlawful conduct is not unduly prejudiced.'' 
Although the hon. Gentleman has come off the word ''paramountcy'', he appears to suggest that the use of the words ''not duly prejudiced'' means that that right is more important than that of the owner of the associated property. 
 The change in wording is not intended to achieve a shift in policy. We are trying to address an oversight, because the current wording would not allow the court to take into account the rights of the enforcement authority unless recoverable property was being dealt with. I hope that the hon. Gentleman accepts that even where associated property is involved, the court must at least consider whether the enforcement authority has rights. In separating out such property, something of no value should not be left.

Dominic Grieve: I am grateful to the Minister for giving way, as dialogue is helpful.
 It is not the case that, without the Minister's amendment, the court would not have to exercise discretion with regard to the matter. The entire clause sets out a series of discretionary provisions that are designed to strike a balance when receivership is made. It is inherent in subsection (6), as it is currently worded, that it is open to the court to hold that an exclusion should be made in respect of associated property, if that is required to fulfil the necessary criteria under subsections (2) and (3) in favour of a person who holds associated property, even if, as a result of that, a considerable level of prejudice is caused to the ability of the enforcement authority to 
 recover the recoverable amount within that associated property. That is a fair principle, and the Minister is going to get rid of it.

Bob Ainsworth: We are discussing provisions where a bona fide purchaser for value is completely protected: we are dealing with property that has become mixed with recoverable property. The hon. Gentleman appears to be suggesting that we can completely ignore the enforcement authority's rights, when it is seeking to deal with such property, even to the point where it does not matter—according to my reading of subsection (6)—that the enforcement authority's rights are unduly prejudiced. That does not matter to him, and he is suggesting that that is fair.

Dominic Grieve: I accept that that is a possible result of leaving subsection (6) as it stands. However, that subsection is part of the total package of clause 255, which includes the specific provision, under subsection (3), of good reasons for making an exclusion. They are,
''(a) to meet his reasonable living expenses, or 
 (b) to carry on any trade, business, profession or occupation''. 
Circumstances will arise where the restraint order will bite on associated property, with the consequence that, prior to that property's being disentangled at the final hearing, the person who owns a large chunk of it may be unable to make his living. He will apply for an exclusion. Subsection (6) currently provides a considerable weight of balance in his favour when that matter comes to be considered. The Minister's change in wording moves the balance in favour of the enforcement authority. Is that fair?

Bob Ainsworth: I do not accept that it moves the balance in favour of the enforcement authority. The hon. Gentleman keeps on creeping back towards paramountcy. He appears to be suggesting that an exclusion order should be granted to allow a person to continue his trade, business, profession or occupation—for example—even if allowing him to do so would unduly prejudice the rights of the enforcement authority. That seems, in effect, to be what he is insisting on, and if that is the case, I do not agree with him.
 Question put, That the amendment be made:—
The Committee divided: Ayes 13, Noes 4.

Question accordingly agreed to.

Roger Gale: It would help if hon. Members would pay attention. I know that we are nearing the end of the sitting, but I remind them that we have 30 clauses to consider by 7 o'clock.
 The chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause, as amended, stand part of the Bill. 
 Question agreed to. 
 Clause 255, as amended, ordered to stand part of the Bill.

Clause 256 - Restriction on proceedings and remedies

Dominic Grieve: I beg to move amendment No. 357, in page 149, line 32, after 'receiver', insert
'and any other affected party'.
 The clause imposes 
''Restriction on proceedings and remedies''. 
Subsection (1) states: 
 ''While an interim receiving order has effect— 
 (a) the court may stay any action, execution or other legal process in respect of the property to which the order applies, 
 (b) no distress may be levied against the property''. 
Subsection (2) provides: 
 ''If a court (whether the High Court or any other court) in which proceedings are pending in respect of any property is satisfied that an interim receiving order has been applied for or made...the court may either stay the proceedings or allow them to continue on any terms it thinks fit.'' 
Subsection (3) states: 
 ''Before exercising any power conferred by subsection (2), the court must give the enforcement authority and (if appointed) the interim receiver an opportunity to be heard.'' 
I am in favour of giving the enforcement authority and the interim receiver the opportunity to be heard, but what about the other side? The amendment would allow ''any other affected party''—the Minister will note the consistency of my approach; I use the word ''affected'' rather than ''interested'' party—to make representations to the court. Is it intended that, under the Bill, only the interim receiver or the enforcement authority may make representations? I find that strange. In circumstances in which there are bound to be other affected parties, they, too, should be entitled to make representations. 
 The amendment is minor and I do not believe that it would prejudice the outcome of the proceedings. The amendment does, at least, ensure fairness. If I have misunderstood the position and other affected parties are also able to make representations under a provision that is not spelt out in the clause, I should be happy to be reassured to that effect. Unless the Minister can reassure me about that, it seems to me that my amendment would be a valuable safeguard that would ensure that the court obeys the usual rules of hearing the other side.

Bob Ainsworth: Let us see the degree to which I can satisfy the hon. Gentleman. Subsection (2) provides that any court in which other proceedings are pending in respect of property subject to an interim receiving order may stay proceedings or impose its own terms on how those proceedings should continue. Before exercising that power, the court must give the enforcement authority and the interim receiver the right to be heard. As the hon. Gentleman said, the amendment would give any other party affected by the proceedings the right to be heard. The clause is intended to cover the situation where a civil recovery procedure and other proceedings are ongoing in respect of the same property. In such circumstances, the parties to the other proceedings will have had an automatic right to be heard, before the court exercises any power conferred under subsection (2) to stay the proceedings or to allow them to continue. We envisaged that those parties would include the respondent to civil recovery proceedings, as the respondent will be holding the property concerned. Those parties might also include holders of associated property, who may, for example, hold an interest in the property, subject to the proceedings.
 In addition, clause 256(3) will give the enforcement authority and the interim receiver the right to be heard before the court takes its decision. The amendment would require the court to give any other party affected by either set of proceedings a right to be heard. It appears that the main people affected by either set of proceedings already have the right to be heard by the court, before it exercises any powers under clause 265(2). We are not sure, therefore, that the amendment is needed. However, the hon. Gentleman has raised a point that we will consider further, to see whether there are any affected parties who should have the opportunity to be heard by the court but who currently have no right to be heard. If, as a result of that process, we identify any gap, we will table an amendment on Report to cover it. With that assurance, I invite the hon. Gentleman to consider withdrawing his amendment.

Dominic Grieve: Yes, I will. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 256 ordered to stand part of the Bill.

Clause 257 - Exclusion of property which is not recoverable etc.

Dominic Grieve: I beg to move amendment No. 384, in page 150, line 3, leave out from 'that' to the end of line 5 and insert
'it is just so to do'.
 The clause deals with the exclusion of property that is not recoverable. Subsection (3) states: 
 ''The court may exclude any property within subsection (2) on any terms or conditions, applying while the interim receiving order has effect, which the court thinks necessary or expedient.'' 
The amendment would replace that with 
'it is just so to do'.
On a previous occasion, members of the Committee debated the use of expressions and, in particular, the word ''appropriate''. The Minister and I were poles apart. I said that I did not like the use of the word ''appropriate'' and that I preferred the word ''just''. The reason for that was that the word ''appropriate'' covered administrative convenience. Under subsection (3), the wording is even more heavily weighted towards administrative convenience. What do the words ''necessary or expedient'' mean? How do they square with the principles of justice? If the words ''necessary or expedient'' mean the same as ''just so to do'', let us have ''just so to do'' because that is a better form of words. If they do not, there is a distinct difference in meaning between ''just so to do'' and ''necessary or expedient''. 
 I worry about the word ''expedient'', because that which is expedient is not necessarily fair or just. Subsection (3) refers to whether property that is not recoverable should be excluded. Subsection (1) states: 
 ''If the court decides that any property to which''—

Roger Gale: Order. I have been listening carefully to the hon. Gentleman. Far be it from me to quarrel with his legal expertise, but it appears that he is speaking to subsection (3), whereas his amendment appears to apply to subsection (2). I am perfectly happy for the hon. Gentleman to broaden the debate slightly, on the understanding that there will not be a stand part debate. However, in the interests of marshalling his argument, he may wish to review his position.

Dominic Grieve: I am very grateful, Mr. Gale, and I apologise profusely to the Committee. I am having to consider whether the error is in my reading, or in my amendment, which I drafted late at night as usual, or whether I intended it to refer to subsection (3). I am sure that I have made an error in identifying the line in which the amendment was supposed to feature, but I am bound to say that I intended to amend subsection (3) for the reasons that I have given—to change ''necessary or expedient'' to ''just so to do''. I am reinforced in that view by the fact that my manuscript note is against the passage concerned. I apologise to the Committee and the Minister, who will have notes prepared with reference to something entirely different. Indeed, I was just trying to look at subsection (2) to see whether it would make sense to make the amendment—

Roger Gale: Order. With respect, the hon. Gentleman cannot move an amendment that is not on the amendment paper. It might be for his convenience to consider not moving it, and engage in the debate that he wants on clause stand part, which would give the Minister the opportunity to reply. Although that would not create an amendment, it would allow the Minister to give any assurances that he wants to give.

Dominic Grieve: I can only apologise further. It is clear that I am in a muddled condition. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Question proposed, That the clause stand part of the Bill.

Bob Ainsworth: The clause contains provisions that are intended to ensure that property does not remain subject to an interim receiving order unnecessarily. Clause 254, which we have already discussed, provides that the court has the power to vary or set aside an interim receiving order at any time. Clause 257 makes further specific provision for the court to vary an order so that certain properties are excluded from the proceedings altogether. It covers two situations: those in which the court decides before the final trial of the action that the property to which the order applies is neither recoverable property nor associated property, and those in which the court thinks that alleged associated property could be excluded from the terms of the interim receiving order without prejudicing the director's right to recover property. The clause therefore provides useful safeguards.
 Clearly, property that is neither recoverable nor associated property should not remain the subject of an interim receiving order once it has been established that that is the case. The court may decide that following an application by an interested person, or in response to a report from the interim receiver made under clause 258. If it so decides, it will be required to exclude the relevant property from the terms of the interim receiving order, which could apply to all of the property subject to the order or just some of it. Property that is alleged to be associated property may be in the hands of persons who are willing to co-operate with the proceedings, and who have no interest in frustrating the future making of a recovery order. When that is the case, there may be no need to apply an interim receiving order to such property. The court may therefore exclude from the terms of the interim receiving order alleged associated property, if it thinks that the property may be excluded without prejudice to possible further rights of the director to recover recoverable property. If the court decides to vary the order so as to exclude associated property, it may apply terms and conditions that it believes necessary or expedient, which may remain in force while the order has effect. The clause ensures that interim receiving orders will be reviewed as necessary and that property found not to be recoverable or associated is removed from the ambit of an order. It will allow the removal of alleged associated property from the terms of the order without prejudicing the director's right of recovery.

Dominic Grieve: I am grateful to the Minister for his clear exposition of the clause. I apologise again to the Committee. I now have the opportunity to reread the provision, instead of moving rapidly from one amendment to another. Perhaps when I drafted the amendment, at 1 o'clock in the morning or whenever it was, I considered tinkering with both subsections (2) and (3). I appreciate that the earlier amendment that I did not move could have been made to subsection (2) in order to achieve a similar impact to the one that I
 hoped to achieve in subsection (3). A general point is involved that, in a funny way, applies to either; we might consider it.
 I realise that the purpose of the clause is to provide a measure of relief in cases in which the court decides that an interim receiving order should be varied so as to exclude property, especially associated property. As the Minister is aware, that takes us back to our discussion of a few minutes ago. 
 Under subsection (2), the varying of an interim receiving order 
''so as to exclude from the property to which the order applies any property which is alleged to be associated property'' 
is not based on whether the court believes that it is just to do so but gives primacy to not prejudicing the enforcement authority's ability to recover the property. In a sense, we are duplicating our earlier discussion. 
 Under subsection (3), on the other hand, 
 ''The court may exclude property within subsection (2) on any terms or conditions, applying while the interim receiving order has effect, which the court thinks necessary or expedient.'' 
That is the point at which I tried to tinker with the provision. Although I developed the argument in relation to the wrong amendment a few minutes ago, the amendment that I developed to subsection (3) was the better of the two amendments and better than messing around with subsection (2). Subsection (3) defines the basis on which subsection (2) should operate. 
 I simply voice that anxiety. I certainly will not resist the incorporation of the clause into the Bill, but I ask the Minister to consider carefully, especially in relation to subsection (3), whether the words ''necessary or expedient'' are correct, for the reasons that I explained in my failed argument a few minutes ago. 
 The court should decide to exclude property on the basis of justice between the parties, especially in relation to the party who has an interest in associated property that may be prejudiced. I do not know whether the Minister and his draftsman can do that, but I ask him to consider the matter.

Bob Ainsworth: I do not know whether the hon. Gentleman has considered that some of the amendments with which he has been tinkering might have an effect that he does not necessarily intend. Perhaps he will reflect on that, and I shall reflect on his point.
 We are dealing with property that is still in dispute. Some of the suggestions that the hon. Gentleman makes might remove the requirement to continue to consider the director's or enforcement authority's right in that dispute. The hon. Gentleman may be thinking of individuals who own associated property and who are not willing to co-operate in the proceedings and he may be thinking that, despite that lack of co-operation, they should have the ability to unfreeze the property to their benefit. I am not dead sure that that is what he wants to achieve, but I shall look into the matter with regard to the amendment that he tabled. We want to give the court the discretion 
 to unravel such matters and take into account the rights of the director and others. I accept that that is a rerun of an earlier debate.

Dominic Grieve: The Minister was correct to say that the director and the enforcement authority have rights. After all, they are bringing the action and they wish to recover recoverable property. I am worried about the innocent individual with associated property who is caught up in the process. Such a position has applied to several clauses that we have discussed, in that the balance is tipped firmly in favour of the director and the enforcement authority against that of the individual. That is why the use of the word ''just'' seemed to go some way to redress that balance in the way in which the court exercises its discretion to exclude property under subsection (2). Clearly, I failed dismally to achieve my objective under the previous amendment.

Bob Ainsworth: Given the mix-up between the hon. Gentleman and myself, I agree to consider the issue.
 Question put and agreed to. 
 Clause 257 ordered to stand part of the Bill. 
 Clauses 258 to 262 ordered to stand part of the Bill.

Clause 263 - Restrictions on dealing etc. with property

Amendment made: No. 406, in page 152, line 34, leave out 
'in relation to recoverable property'.—[Mr. Bob Ainsworth.] 
Clause 263, as amended, ordered to stand part of the Bill. 
 Clauses 264 and 265 ordered to stand part of the Bill.

Clause 266 - Reporting

George Foulkes: I beg to move amendment No. 407, in page 153, line 34, leave out 'receiving' and insert 'administration'.
 This is a purely drafting amendment. It is designed to ensure that the correct Scottish term ''administration'' is used in the clause, instead of the English and Welsh term ''receiving''. 
 Amendment agreed to. 
 Clause 266, as amended, ordered to stand part of the Bill.

Clause 267 - Recovery orders

Dominic Grieve: I beg to move amendment No. 389, in page 154, line 3, leave out 'may' and insert 'must'.

Roger Gale: With this it will be convenient to take the following amendments:
 No. 390, in page 154, line 5, leave out first 'and' and insert 'or'. 
 No. 392, in page 154, line 15, leave out subsection (4)(c).
 No. 393, in page 154, line 17, leave out subsection (4)(d). 
 No. 391, in page 154, line 24, leave out paragraph (b). 
 Clause stand part.

Dominic Grieve: The clause deals with recovery orders and the vesting and realisation of recoverable property. It states:
 ''If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order...The recovery order must vest the recoverable property in the trustee for civil recovery...But the court may not make in a recovery order—...any provision in respect of any recoverable property if each of the conditions in subsection (4) is met and it would not be just and equitable to do so, or...any provision which is incompatible with any of the Convention rights (within the meaning of the Human Rights Act 1998''. 
As the Minister will remember, in our debate last week I expressed an opinion that the 1998 Act should be specifically referred to in view of the fact that the front of the Bill states that it is human-rights compliant. I cannot recollect previously having heard the 1998 Act referred to as a fetter on a power that a Bill intended to confer on courts. 
 Subsection (4) goes on to deal not with the bona fide purchaser for value without notice, who is protected elsewhere in this part, but with the bona fide obtainer of property. The subsection sets out four conditions that must be fulfilled before the court may decide not to make a recovery order. It would be worth while for the Committee to consider them: 
 ''The conditions...are that— 
 (a) the respondent obtained the recoverable property in good faith, 
 (b) he took steps after obtaining the property which he would not have taken if he had not obtained it or he took steps before obtaining the property which he would not have taken if he had not believed he was going to obtain it, 
 (c) when he took the steps, he had no notice that the property was recoverable, 
 (d) if a recovery order were made in respect of the property, it would, by reason of the steps, be detrimental to him.'' 
Subsection (5) states: 
 ''In deciding whether it would be just and equitable to make the provision in the recovery order where those conditions are met, the court must have regard to...the degree of detriment'' 
 ''the enforcement authority's interest in receiving the realised proceeds''. 
This is an important clause. I tabled some amendments to it, and they have been grouped together. That is sensible, because it enables us to consider the clause as a whole, but that does not mean that I shall push every amendment equally. 
 I start with amendment No. 389, which in some ways is the most important amendment. It would substitute the word ''must'' for ''may'' in the phrase 
''the court may not make in a recovery order''. 
That would make the provision mandatory. If that were done, ''must'' would nevertheless be heavily qualified by the subsequent wording that I read out. 
 That would prohibit the court from making a recovery order if the conditions under subsection (4)(a) to (d) were met. 
 Let us assume that a case met all the conditions in subsection (4). Can the Minister realistically think of any circumstances in which it would still be just to deprive the innocent party of his property, and, moreover, in which that would still be compatible with the European convention on human rights? If my argument has any force, it would be sensible to substitute ''must'' for ''may''.

Norman Baker: I just wondered whether it was a matter of linguistics. The phrase ''may not'' could be read as an instruction. The phrase, ''You may not do this'' is a prohibition. The word ''may'' is permissive, but ''may not'' is prohibitive. I wonder whether the hon. Gentleman's point, which is valid in his argument, is covered by the word itself.

Dominic Grieve: The hon. Gentleman makes a good point, but I am not entirely persuaded by it. If he is right, why should not we have the words ''must not''? In that case, the Minister would have no difficulties in conceding the issue. I inferred from the use of the words ''may not'' that the provision was trying to leave some latitude to the court in such circumstances. If the Minister reassures me that no such latitude was intended to be given—he could do that by way of an intervention—I shall not pursue that amendment. Does the Minister wish to intervene?

Bob Ainsworth: Only to agree with the hon. Member for Lewes (Norman Baker) that the change of words would make absolutely no difference.

Dominic Grieve: The Minister should consider changing the word, as ''must'' has a far more mandatory ring to it than ''may''. However, I shall move on to the other amendments.

Bob Ainsworth: The hon. Gentleman has had his victory for today; he cannot have another.

Dominic Grieve: There is no harm in asking, and ''must'' is the better word.
 Amendment No. 390 is a wider amendment, because it would allow the court, notwithstanding that the criteria of subsection (4) were not fulfilled, a residual discretion not to make the order. 
 We have discussed judicial discretion. I have said that, if all of the four tests laid down in subsection (4) were to be met, it would be impossible to envisage circumstances in which an order could fairly be made—I think that the Minister agreed with that. However, what would be the situation if some of the tests could not be met? The recoverable property might have been obtained in good faith by someone but, for instance, he might be unable to show that, when he took the steps, he had no notice that the property was recoverable. In those circumstances, might it be appropriate for the court to be unwilling to make the 
 order? With regard to those circumstances, the only protection at the moment would be incompatibility with the Human Rights Act. 
 At what point does one know that property is recoverable? Let us consider an example. Someone might have property in his possession that is associated—it is mixed in with his own property. That person has to live, and to operate. Before proceedings have been commenced, a rumour might start to float abroad that the property that he has held completely innocently, might be of interest to the Assets Recovery Agency. He has to deal and operate in that property to live; he has no other option—if he does not complete a deal, he may lose out. After proceedings have started, he fulfils all the criteria of subsection (4)(a) to (d), but it is alleged against him, ''When you took some of those steps, you should have known, even though you came by that property innocently and had taken steps in relation to it, that it was recoverable.'' He will fulfil the condition in subsection (4)(d), because he will be able to establish that it would be highly detrimental to him for the property to be removed and recovered by the enforcement agency. In those circumstances, should his only protection be the European convention on human rights and the Human Rights Act? I suggest that it should not be necessary to invoke them, and that the sensible course of action would be to allow him to rely on a judicial discretion, which would be provided by amendment No. 390. 
 Amendments Nos. 390, 392, 393 and 391 are alternative ways of approaching the matter, by tinkering around with some of the clauses. In light of the debate that we are having and the importance of amendment No. 390, it will not be necessary to press the amendments because they are simply illustrations of the way in which the clause could be altered by removing subsections. The amendments were designed to probe, and to stimulate discussion. Each amendment, if made, would affect what is possible and what is not. 
 I shall not press the amendments because the key amendments are amendment No. 389, which the Minister assures me is not required, and amendment No. 390, which would provide a measure of judicial discretion. I invite the Minister to concentrate on the latter.

Bob Ainsworth: The hon. Gentleman invites us to consider how narrow the criteria that a person must meet are, and says that if all the criteria were met, all that would save a person from a recovery order would be the provisions of the European convention on human rights. He says that there should be a wider safeguard than that. Indeed, he spoke about a person against whom proceedings have not been started but about whom stories go around.
 We are discussing what happens after a court has decided that there is recoverable property. The hon. Gentleman said that we were not discussing bona fide purchasers for value because they were dealt with elsewhere. Yes, they would have been dealt with in the court case. They would have had an opportunity to 
 show the court that they were bona fide purchasers for value. If they had successfully shown that, they would not be considered at this point. 
 The hon. Gentleman asks for a broad safeguard after the decision has been taken. The safeguard for bona fide purchasers for value would be there because it would be present during the court proceedings when a decision was taken. We are discussing how the matter is dealt with after the court has taken the decision and decided how to deal with recoverable property that has been identified. That is the reason for the narrowness of the safeguard and the stipulation that all the different requirements be met. I am not sure that the hon. Gentleman portrayed that when he moved the amendment. We are not dealing with a totally innocent person who has been accused. 
 Amendment No. 389 would replace the word ''may'' with the word ''must'' in the first line of subsection (3), so that the phrase would read 
''the court must not make'' 
rather than 
''the court may not make''. 
The amendment would have no effect on the meaning or the clarity of the subsection. However, although it would not make the subsection any worse—I will not argue with the hon. Gentleman about that—there is no need for change. If he argues for change, he must prove the need for it. 
 Amendment No. 390 would have two effects. First, the court would always be prevented from making a civil recovery order in a bona fide case of change of position. The provisions of subsection (3) envisage that such cases should attract exemption only to the extent that the civil recovery would not be just and equitable. Secondly, the amendment would introduce an entirely new exemption that would not be limited to bona fide change of position cases, in which civil recovery would be prohibited anyway, in which it would not be just or equitable to make the recovery order. In effect, that would convert civil recovery from a mandatory remedy to a discretionary one. The court would have to decide in every case whether it felt that the recovery of criminal proceeds was just and equitable.

Norman Baker: I have listened carefully to the Minister and he seemed to suggest that he wanted a mandatory regime rather than a discretionary one. As I understand it, that is why he is objecting to amendment No. 390, which would insert some discretion by replacing ''and'' with ''or''. In that case, why are the words
''it would not be just and equitable to do so'' 
included at all? What is their function? Are they intended to provide discretion and, if so, how is it that discretion fettered? If the Minister is really arguing for a mandatory clause, surely the words should not be there at all.

Bob Ainsworth: The phrase applies only when considering the other issues dealt with in subsection (4). It is not intended to provide discretionary ability. The court decides whether there is recoverable property, after it has heard the case for and against. In
 those circumstances, when the court has decided that there is recoverable property the recovery is mandatory. The circumstances that we are dealing with are those in which people have taken actions after that, because they have received recoverable property that they did not know was forfeit, or they anticipated that they would receive that, and they have suffered detriment, and it would not be just and equitable to continue to recover property in those circumstances. That is the barrier over which the individual must climb. He must be able to show that all those things are the case in order to obtain the exemption that the clause provides. The clause is not intended to provide discretion on the recovery in the first place—that is the court's decision, and the rest flows from that.

Norman Baker: Subsection (4) sets out four tests, and there must doubtless be a factual assessment of whether the tests in paragraphs (a), (b), (c) and (d) are met. The phrase,
''it would not be just and equitable'' 
is not included with those facts in subsection (4). That phrase is slotted elsewhere in the clause, in subsection (3). That suggests that it is a matter not of fact but of discretion.

Bob Ainsworth: The hon. Gentleman is absolutely right about the structure of the clause. However, the effect of the clause is that five tests must be met. Four of those are contained in subsection (4), but the ''just and equitable'' test would also have to be met. Therefore it is a narrow area, and the effect is that all five of the tests would have to be met. I am not denying that.
 I am not sure what the hon. Gentleman is arguing for. Although he is pointing out things in the clause, he is not making an argument, other than that the confiscation should be discretionary. As I said, that is not the Government's position. We believe that when the decision has been taken, the recovery should be mandatory. We should provide people with safeguards in those limited circumstances in which, in effect, all five of the tests are met—the ''just and equitable'' test as well as the four objective tests laid out in subsection (4). The hon. Gentleman does not appear to agree with me. 
Amendment No. 391 would remove the obligation on the court, when it is considering whether making a recovery order would be just and equitable, to have regard to the enforcement authority's interest in recovering the property.

Dominic Grieve: To make the position clear, amendments Nos. 392, 393 and 391 went together. They would have reduced the condition that the respondent obtained the recoverable property in good faith. The alternative approach would be amendment No. 390, which would substitute ''or'' for ''and'' before the words
''it would not be just and equitable to do so''. 
On balance, I prefer that amendment, which is why I did not want to trouble the Minister unnecessarily.

Bob Ainsworth: In that case, let us turn to amendment No. 390. We oppose it. The Government do not agree that a respondent who satisfies the criteria under subsection (4) should have an automatic exemption from civil recovery. Those criteria constitute a standard defence in civil law. The defence does not attract automatic exemption elsewhere and we do not consider that it should do so under the clause. Indeed, the courts have specified that the defence should be developed on a case-by-case basis. When the criteria in subsection (4) are met, the court must retain the ability to exercise its judgment in the light and circumstances of the case.
 Let us suppose that the respondent has spent money on an expensive cruise, and would not have done so had he not received as a gift some very valuable jewellery that transpires to be the proceeds of another person's unlawful conduct. Whether the respondent should be allowed to keep the jewellery must surely depend on the circumstances, including the degree of detriment that he will suffer if it is recovered. If he is wealthy, the court may think that the detriment that he will suffer is small and is outweighed by society's entitlement to recover the criminal proceeds. Why, after all, should he be allowed to benefit from them? If, however, the recovery of the jewellery would throw him into penury and prevent him from maintaining his mortgage payments, leading to the loss of his home, the court may decide that he should be allowed to keep the jewellery. 
 There may be intermediate cases, in which the court decides that some, but not all, of the jewellery should be recovered. That is why subsection (3) is drafted as it is. It requires the court to consider whether recovery would be just and equitable and, in doing so, to weigh up the enforcement authority's interest in recovering the property on one hand, and the degree of detriment that would be suffered by the respondent on the other.

Norman Baker: Can the Minister explain the reason for subsection (3)(b)? Surely it is axiomatic that, throughout the Bill, all provisions have been assessed for compatibility with the Human Rights Act 1998. The phrase that is used in subsection (3)(b) does not appear throughout the Bill with regard to every provision, so why has it been thought necessary to include it in clause 267? Is there a specific point to be made, or is subsection (3)(b) redundant?

Bob Ainsworth: Let me finish dealing with amendment No. 390, which was the main concern of the hon. Member for Beaconsfield (Mr. Grieve). We may then talk about why the Human Rights Act appears in the clause but nowhere else in the Bill.
 I am sure that the correct approach is to allow the court to use its discretion, and to look at both sides of the argument when it is examining whether the respondent has suffered a bona fide change of position. We do not agree that civil recovery should be converted to a wholly discretionary order. That is the second, and even more wide-reaching, consequence of the hon. Gentleman's amendment. It seems to us that people seeking to hang on to the proceeds of unlawful 
 conduct should be allowed to do so only in the limited and clearly defined circumstances that we have proposed. As I have said, the criteria are based on standard civil defences in other cases. Those are our main reasons for opposing amendment No. 390. 
 The hon. Members for Beaconsfield and for Lewes asked why the European convention on human rights was mentioned in subsection (3)(b) of the clause, but not elsewhere in the Bill. It is mentioned there because there is a duty to make a recovery order that is mandatory at that point. Potentially, that could conflict with the court's duty under section 6(3)(b) of the Human Rights Act, which makes it clear that that duty takes priority. Because we are insisting that the confiscation procedures are mandatory, we felt that it was appropriate to make it clear that the provisions of the Human Rights Act were none the less the overriding consideration in such policy. I think that I have dealt with the substantive point made by the hon. Member for Beaconsfield in connection with amendment No. 390, and I ask him to consider withdrawing the amendment.

Dominic Grieve: I am grateful to the Minister for his explanation. Speaking personally, I should be more reassured by the use of the word ''or'' rather than the word ''and''. I appreciate his point, and I suppose that I can rely on the Human Rights Act when an individual does not fall within subsection (4). It is odd, however, that the hon. Gentleman explicitly acknowledges the presence of the Human Rights Act, given that the only reason why the Bill refers to it is the acknowledgment that subsection (4), with its tightly drawn provisions, might turn out to be incompatible with it. If that were not the position, there would be no reference to the Act in the clause. However, if the amendment were accepted, it would provide a fall-back position for the court, which took the view that notwithstanding the strict fulfilment of the tests under subsection (4), it would still not be just and equitable to allow recovery to take place. That is the issue between us.

Paul Stinchcombe: I wonder whether, by a side wind, the hon. Gentleman's amendment could bring about a situation in which it was not just or equitable for such action to take place, yet the conditions under subsection (4) were satisfied none the less.

Dominic Grieve: The hon. Gentleman makes a good point. It could be argued that a better amendment would be longer-winded than my amendment, and the clause would say:
''any provision in respect of any recoverable property if each of the conditions in subsection (4) is met and it would not be just and equitable to do so, or'' 
that it would not on some other grounds be just and equitable to do so. I listened particularly to what the Minister said, and as our argument developed, it struck me that the removal of the linkage between subsection (4) and the words ''just and equitable'' was undesirable. As the hon. Gentleman may have 
 appreciated, that was not my intention. I wanted to allow for a further possibility, not to reduce the force of the original one. That is one of the reasons why I shall withdraw the amendment. I acknowledge that as it stands, it would not completely meet my objective. However, will the Minister consider the issue, because we may revisit it?

Bob Ainsworth: We shall have a very happy Christmas.

Dominic Grieve: The Minister will have a very happy Christmas: he will be helped by many officials to consider my argument. As for my Christmas, I am informed that on 4 January I will have to think about the next set of amendments to table for our return to the Committee. [Interruption.] I reassure the groaning hon. Member for Birmingham, Hall Green (Mr. McCabe) that our proceedings in Committee will end on 5 February—I am grateful to have received some sympathy from Labour Members. I shall also think again and consider whether this matter should be reviewed on Report by way of a better-worded amendment. On that basis, I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 267 ordered to stand part of the Bill.

Clause 268 - Functions of the trustee for civil recovery

Question proposed, That the clause stand part of the Bill.

Dominic Grieve: I tabled an amendment to the clause, but it was not selected. My inquiries revealed that, like many other amendments that I have tabled in the course of the Committee, it was not selected because it was thought to be unnecessary, as it stated something that was already included in the Bill. I raise that question now so that we may have the Minister's assurance on the record.
 Subsection (1) states: 
 ''The trustee for civil recovery is a person appointed by the court to give effect to a recovery order.'' 
Under subsection (2), 
 ''The enforcement authority must nominate a suitably qualified person for appointment as the trustee.'' 
I assume that the court has the discretion to reject the nominee. My amendment was designed to make that clear. Those who know much more than I do about the drafting of legislation take the view that that is almost certainly the case—indeed, they are convinced—but a reassurance from the Minister in the pages of Hansard will provide that extra degree of assurance. Could the court reject the receiver nominated by the enforcement authority?

Bob Ainsworth: The hon. Gentleman may be assured that that is the case.
 Question put and agreed to. 
 Clause 268 ordered to stand part of the Bill.

Schedule 4 - Powers of trustee for civil recovery

Question proposed, That this schedule be the Fourth schedule to the Bill.

Mark Field: The schedule mentions compromise. I wonder what power the trustee has under paragraph 5, which refers to
''compromise or other arrangement in connection with any claim relating to the property.'' 
I wonder whether the Minister would elucidate, because it seems that the trustee has been stripped of power. In particular, I am slightly concerned about the position of third parties. Can the Minister clarify what the Government had in mind on the subject of compromise on the part of the trustee, and whether the passage is part of some standard documentation on trustee powers, which is found in similar Acts?

Bob Ainsworth: I reassure the hon. Gentleman that most of the details of the clauses that we are discussing are from other Acts and other rules for civil recovery. It may help him to know that property detailed in a recovery order may include a business, shares or some similar type of property. The trustee must be able to manage the property until he decides how best to realise it. The schedule therefore provides that the trustee has the power to manage property. That will allow him to preserve the value of the assets. That is a similar power to that available to the interim receiver or administrator under schedule 3.
 The schedule provides the trustee with the power to take part in legal proceedings involving the property and to make a compromise in connection with any claim relating to it. He can do many other specified things that may be necessary before the property can be realised, including suing, being sued and employing agents. The Bill also provides a general power allowing the trustee to do anything else that is necessary or expedient. He effectively holds the ring and can settle proceedings involving the property. That is a standard provision lifted from other civil proceedings, not a new power that is not used elsewhere. 
 Question put and agreed to. 
 Schedule 4 agreed to. 
 Clauses 269 and 270 ordered to stand part of the Bill.

Clause 271 - Agreements about associated and joint property

Dominic Grieve: I beg to move amendment No. 395, page 156, line 6, at end insert
'and the time for making such payment may be postponed by agreement between the enforcement authority and the excepted joint owner.'.
 The clause allows ''Agreements about associated and joint property'' to be reached by the enforcement authority and the person who holds the associated property or is the excepted joint owner. It is a sensible 
 provision designed to enable the parties to make agreements. I was a little puzzled by subsection (1)(b), which states: 
 ''the recovery order may, instead of vesting the recoverable property in the trustee for civil recovery, require the person who holds the associated property or who is the excepted joint owner to make a payment to the trustee.'' 
That provides an opportunity for the person holding the associated property to buy out the trustee's share to pay that money back. However, there did not seem to be a provision whereby the deadline for making that payment could be postponed by agreement. I emphasise the words ''by agreement''—it would have to be with the enforcement authority's consent. 
 Clause 276 deals with consent orders. Those may allow for a recovery order to be made on terms by the parties, and allow for postponement to take place at that point, but I am not sure that that is the case. The Under-Secretary has made it clear that the enforcement authority wishes to recover the money. However, if it believed that somebody in possession of associated property was bona fide, one would expect it to be willing to come to arrangements to allow for payments by instalments, or for payment to be postponed. It seemed that the amendment might allow us to discuss that issue. The Inland Revenue sometimes allows postponement, even when dealing with someone who has not paid his tax, and as a matter of fairness and common sense, when dealing with a potentially innocent party, postponement should be possible. Should we not spell that out explicitly in the Bill? I am mindful that the Under-Secretary may tell me that that is provided for elsewhere in the Bill. However, given that we are dealing with agreements between the parties to resolve the issue, should that not be provided for in this clause?

Bob Ainsworth: Clause 271 provides for a recovery order to give effect to an agreement reached by the enforcement authority and the holder of associated property or an excepted joint owner. Such an agreement would allow the holder or the owner to agree to pay the trustee for civil recovery a sum in order to buy out the enforcement authority's interest in recoverable parts of the property. That would be subject to the approval of the court. In those circumstances, the clause provides that a recovery order may require the person who holds the property, or who is the excepted joint owner, to make the payment to the trustee.
 The amendment would amplify the existing provision so that, in the case of an excepted joint owner, the recovery order could, if the enforcement and the excepted joint owner agreed, allow for the making of the payment to be postponed. The amendment seeks to make provision only in relation to the excepted joint owner and not to the holder of associated property. I appreciate that in some cases it may be difficult for an excepted joint owner immediately to lay his hands on sufficient money to buy out the enforcement authority's interest in the recoverable property. However, the amendment is not 
 needed to ensure that an equitable arrangement can be reached when the enforcement authority, and the holder of the non-recoverable property, agree. 
 The Bill does not specify when the payment to the trustee should be made. A recovery order could specify a delayed date for payment, if both parties agree on it— which is the point made by the hon. Member for Beaconsfield. Alternatively, if no such provision were made in the recovery order, the trustee who acts on behalf of the enforcement authority would be able to ensure that any agreement that was acceptable to both parties was given effect. That degree of flexibility will give the excepted joint owner sufficient time to arrange finance to buy the director's share of the property—for example, to arrange for a mortgage to purchase the remainder of the property that is deemed to be recoverable. I am saying not that that is provided elsewhere but that the amendment is unnecessary. Such agreements are perfectly possible, and it is unnecessary to spell that out in the Bill to ensure that they can be made when both parties agree. With that assurance, I ask the hon. Gentleman to withdraw the amendment.

Dominic Grieve: Happily. So many provisions in the Bill have a mandatory flavour, tying down and trying to constrain every avenue through which exemptions may be given or exceptions made, that a short discussion on this matter seemed worth while. The Minister has reassured me, and I dare say that in the event of a future dispute on the subject someone could wave around the report of our proceedings as evidence of what he intended. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn.

Bob Ainsworth: I beg to move amendment No. 312, in page 156, line 16, after 'tenancy', insert 'and
(b) the enforcement authority agrees that the person has suffered loss as a result of the interim receiving order or interim administration order'.

Roger Gale: With this it will be convenient to take Government amendments Nos. 313 and 314.

Bob Ainsworth: I had intended to say that these amendments were minor, but the hon. Member for Beaconsfield is so distrustful of my intentions that I had better not.
 The amendments make minor changes to the compensation provisions in clauses 271 and 272 with a view to achieving fairness and consistency. Clauses 271 and 272 specify the arrangements that will apply when associated property or property held by an excepted joint owner is the subject of a recovery order. If an interim receiving or administration order has been applied at any time to the property, the arrangements allow for a payment to be made in respect of the property in order to compensate the person who holds the property for any losses suffered as a result of the order. 
 That is currently given effect in the Bill as follows. Under clause 271, when agreement is reached between 
 the enforcement authority and the associated property holder or excepted joint owner, the person may make a payment to the trustee in lieu of the recoverable property. That payment may be reduced by an agreed amount to reflect any losses suffered in respect of the associated property or joint tenancy. 
 Under clause 272, in the event of no agreement, the court may order the trustee to make a payment to the associated property holder or excepted joint owner. The order may require the enforcement authority to pay compensation for any losses suffered in respect of the associated property or joint tenancy. 
 Amendments Nos. 312 and 313 restructure subsection (4) of clause 271. Amendment No. 312 will make it explicit that a reduction in the amount to be paid by the trustee will be made only if the enforcement authority agrees that the person has suffered loss as a result of the interim receiving order or administration order. That is implicit in the current provision, but it is made explicit by the restructuring. 
 Amendment No. 313 represents the change of substance to the provision and brings it into line with the general compensation provisions in clause 282. Amendment No. 314 does the same for clause 272. 
 Clause 282(8) provides for the amount of compensation to be at the court's discretion and to have regard to the losses suffered and any other relevant circumstances. Clauses 271 and 272 do not currently include a provision allowing any relevant circumstances to be taken into account. Without that, only the loss suffered could be taken into account in calculating a reduction under clause 271 or the amount to be paid under clause 272. If the person involved has himself contributed to the losses through, for example, delays, that may be taken into account under clause 282, but not under clause 271 or clause 272. 
 We believe that it should be possible to take such circumstances into account in deciding what payment is to be made in respect of the property under clauses 271 and 272. Government amendments Nos. 313 and 314 will allow ''any ... relevant circumstances'' to be taken into account.

Dominic Grieve: I reassure the Minister that I shall not oppose his amendments. It is noteworthy that, like virtually all his amendments, they tighten up the Bill. As he explained, these amendments boil down to enabling the court to look further than simple financial loss, and towards the conduct of the party concerned. That is reasonable. However, I shall rejoice when he introduces amendments that shift the balance away from the enforcement authority toward individuals' rights. I dare say that that will happen in the new year.
 Amendment agreed to. 
 Amendment made: No. 313, in page 156, line 18, leave out from 'to' to end of line 19 and insert 
'that loss and to any other relevant circumstances'.—[Mr. Bob Ainsworth.]
 Clause 271, as amended, ordered to stand part of the Bill. 
 Clause 272
 Associated and joint property: default of agreement 
 Mr. Grieve
 : I beg to move amendment No. 402, in page 156, line 45, after 'regard', insert 'principally'.

Roger Gale: With this it will be convenient to take amendment No. 403, in page 157, line 4, at end insert 'and thereafter to'.

Dominic Grieve: Here I am again, rowing in the other direction, rather hopelessly, against the Minister's far greater power. With this amendment, I propose to shift the balance in favour of the person who holds the associated property when the issue must be decided in default of agreement.
 The amendments , which would affect subsection (4), would provide that 
''the court must have regard principally to...the rights of any person who holds the associated property or who is an excepted joint owner and the value to him of that property or, as the case may be, of his share (including any value which cannot be assessed in terms of money), and thereafter '' 
to consider 
''the enforcement authority's interest in receiving the realised proceeds of the recoverable property.'' 
I emphasise to the Minister—because although we have discussed this before, it is worth repeating—that the basis for doing that is that the funds or money that the enforcement authority will try to recover are not necessarily attributable to a victim. They will not necessarily have been obtained from another person. They are likely to be the fruits of an illegal transaction, but the transaction may not have had a victim. If a person is willing and foolish enough to spend a lot of money buying cocaine in the marketplace, the transaction would be illegal and the individual who received the money would be unfairly and improperly enriched. However, there would be no monetary victim. 
 The clause deals with people who may, further down the road, have innocently acquired assets resulting from the unlawful transaction. In such circumstances, when considering the recovery, the balance should be in favour of the rights of the person who holds the associated property. His position should be considered before that of the state as the enforcement authority. 
 The clause should strike a balance. The question is where the court should look first. My view is that the position of the innocent individual who holds the associated property should be considered first. That is because we are not necessarily dealing with assets that are owed to or returnable to an individual.

Stephen McCabe: I am beginning to think that I am misunderstanding the hon. Gentleman. Will he give me an example of how somebody innocently acquires assets derived from a cocaine deal?

Dominic Grieve: Perhaps understandably, the hon. Gentleman has not been following the debate over the past few sittings. The whole issue of associated and
 joint property is about circumstance. A sum of £2,000 may be the result of a cocaine transaction, so, as I have explained, there is no victim, because nobody has lost that £2,000. Although the transaction was unlawful, the individual who paid the money did so willingly, because he wanted the cocaine.

Paul Stinchcombe: May I mention, as an aside, the fact that 80 per cent. of the acquisitive crime in my constituency is drug related? The person who pays for that cocaine is paying for it with the proceeds of other crimes.

Dominic Grieve: That is a valid point, but it raises an issue of recovery separate from that which is raised with regard to the person who originally committed the crime.
 It is socially desirable, and in the interests of justice and the maintenance of law and order, that the state should recover the proceeds of unlawful conduct; that is why my party has supported the principle of the Bill. However, it is also necessary to address the consequences for individuals who become involved in that process innocently; that is why associated and joint owner property are important. I hope that that answers the hon. Gentleman's point. 
 The Minister would not have included the clauses that we have been discussing unless he accepted the fact that it is likely that situations will arise involving individuals who hold associated property—exempted joint owners—who have the problems that we addressed earlier when we discussed who should be exempt. The provisions under discussion explain how the court should deal with the recovery of property in default of agreement. In those circumstances, a degree of primacy should be accorded to the innocent individual who has got mixed up in the matter, and who might be ruined by the process of having the relevant assets removed from him. 
 The court has a wide discretion, and I simply suggest that it should be exercised in a way that addresses the rights of the person who holds the associated property, before the rights of the enforcement authority are taken into consideration.

Ian Davidson: There appear to be parallels between key issues concerning tainted gifts, about which I sought clarification, and the subject under discussion—with regard, for instance, to someone who owns an asset and alleges that it has been acquired honestly and fairly. I was wondering whether the hon. Member for Beaconsfield agreed with me about that.

Mark Field: Let me spell out my party's concern. I understand why the Government, and other Labour Committee members, hold to their view about the matter: it is difficult to accept that an individual who has gained from the proceeds of crime might try to rely on this clause, or others, by saying, ''Actually, part of the money was from illegal proceeds, but some of it was legitimately acquired.'' It might be difficult, in such circumstances, to identify a defined pool, or it
 might be straightforward to do that, but the onus must be on the criminal who has benefited from the proceeds of crime to show that a defined part of his assets is associated property—that a defined part of it was generated by legitimate means.
 My party has particularly deep concerns about the consequences for innocent third parties. With regard to the confiscation of the proceeds of crime, the Assets Recovery Agency might tell such people that they are caught up in the issue of associated property, and it might then put a great burden of proof on them. They might have bought property in tandem with someone who was relying on the proceeds of crime, but they might not have known that any of the moneys that were going towards the purchase of the property—or land, or item—were the proceeds of crime. My hon. Friend the Member for Beaconsfield has got this absolutely right—when an innocent third party is involved, it would be wrong for that innocent third party to be lower down the pecking order. Surely, in that context, the innocent third party's interests should come first. 
 I entirely appreciate that when an individual who has relied on the proceeds of crime tries to argue that only a small proportion of the money that went into a purchase was the proceeds of crime, there must be a greater burden on that individual to prove his case. However, when an innocent third party is involved, I, too, share my hon. Friend's concerns that it would not be right for that individual to have as great a burden placed on him in proving his case as the villain.

Bob Ainsworth: I accept what the hon. Gentleman is saying. Supporting his hon. Friend, he says that he does not believe that the innocent third party—the person who owns associated property, or the joint owner of property that is potentially recoverable—should be lower down the pecking order, but they are not. In fact, his hon. Friend is seeking to put them higher up the pecking order. The Bill obliges the two interests to be dealt with together.
 We have clashed on this issue before, and the hon. Member for Beaconsfield has accused me of trying to misrepresent his views, but I continue to be amused by his concept of victimless crimes. We would not be undergoing this process if such crimes were victimless. The victims are everywhere. They are in our constituencies, suffering massively from the consequences of the acquisitive crime that drives the gangs that organise cocaine deliveries to Glasgow, Pollok, to Coventry, North-East and elsewhere. We are trying to set up a system in which the various enforcement agencies provided for under the Bill act on behalf of society in general—but the hon. Gentleman has chucked into that the concept of the victimless crime, which does not represent the world as I see it.

Dominic Grieve: That seems a little far-fetched, in the light of the amendments. The principle of recovery is established; we are trying to address the method of recovery. The rights of the individual should have primacy. The Under-Secretary said that I had suggested that such crimes are victimless. I never said
 any such thing. However, we must narrow the issue to financial matters, which do not include the wider social victims. We are not necessarily dealing with property that has been unlawfully obtained in the sense of being stolen or obtained by fraud from another individual. We are dealing with the proceeds of unlawful conduct, which is different.

Bob Ainsworth: I understand that, but the hon. Gentleman says that he supports the principle of recovery. He knows how difficult recovery will be, and how adept people are at hiding the proceeds of crime. The enforcement authority must therefore have the ability to chase property through its various transformations, and along the routes that it travels. When it discovers the property that is the representation of the proceeds of crime, and that is inextricably tied up with other property, in unravelling and dealing with all that, consideration should be given to both sides. The hon. Gentleman wants to relegate the public interest below that of the joint owner or the associated owner. I fundamentally disagree with that, because of the origin of the problem and the need to be effective in recovering the proceeds of crime. I am not seeking—although the hon. Member for Cities of London and Westminster (Mr. Field) is under the impression that I am—to give lower priority to the person whose property has become tied up and, as a result, is associated property. We want the two matters to be dealt with equitably.

Dominic Grieve: Yes, but again I bring the Minister back to what the clause is all about. It provides mechanisms by which the court, in default of agreement, can devise ways and orders to ensure that a recovery order is made and implemented to allow money to go back from the person who holds the associated property, or the excepted joint owner, to the enforcement agency. It is implicit in the clause that the recovery will take place. That governs the manner in which the recovery will take place, so may I say again to the Minister that the rights of the innocent individual who is affected should have primacy against those of the enforcement agency? The agency will still recover the money—or, at least, that is the principle behind the clause.

Bob Ainsworth: I think that we disagree, and I am not sure that it is worth continuing with the argument.
 Under clause 272(4), in making such a provision the court must have regard to the rights of the people concerned and the value to them of the property, as well as to the rights of the enforcement authority. The court will look at all matters that have a bearing on the issue, not only at monetary value. It will consider the rights of the person and the interest of the enforcement authority at the same time. The overarching safeguard is that it can make an order in respect of non-recoverable property only if it thinks it just and equitable to do so. 
 The amendments would mean that the court would be required to have principal regard to the rights of the people concerned and the value to them of the property. We do not believe that the amendments are needed to ensure that the persons who hold associated or joint property are treated fairly. Subsection (4) is 
 essentially telling the court to act proportionately. The court must weigh up the public interest in ensuring that the enforcement authority receives the proceeds of the recoverable property as against the property rights of the individual associated property holder or excepted joint owner.

Dominic Grieve: Perhaps I have misunderstood what clause 272 is trying to achieve. If I have, I should be grateful for the Minister's clarification. I assumed that it presupposed that the principle of recovery, including whether payment might be postponed, had been established. Subsections (2) and (3) refer to the provisions that a recovery order may make in terms of creating or extinguishing interest, vesting property in the trustee, extinguishing the joint owner's interest and the ''severance of his interest''. It is in those areas that I was asking for the rights of a person who holds the property to be regarded as paramount, not with regard to the principle that eventually, recovery should take place. If I have misunderstood the provision, and the Minister is saying that subsection (4) allows for the possibility that no recovery will take place, I should be grateful to be informed.

Bob Ainsworth: Clause 272 will not apply when there is to be no recovery. The hon. Gentleman is right; it is about associated joint property in default of agreement. The principle of recovery has not yet been established. The clause deals with associated property. The court may decide that there should be no recovery of that property. The issue is how to deal with the separation of those properties, and how to behave proportionally with regard to a separation when an agreement cannot be reached. Obviously, in the first instance there should be an attempt to reach an agreement so as to separate out the recoverable property.
 When an order is made to recover the proceeds of crime, the recoverable property is clearly recoverable. It is not necessarily yet the case that the associated property is recoverable. An agreement is attempted in order to separate that out. If an agreement cannot be reached, subsection (4) will ensure that both the owner of the associated property and the interests of the enforcement authority are dealt with in a fair and proportionate way. I do not know whether that helps the hon. Gentleman.

Dominic Grieve: It certainly does. The Minister began his comments by saying one thing, and switched to saying another half way through.

Bob Ainsworth: You noticed.

Dominic Grieve: As I have occasionally done the same thing myself in the past four weeks, I shall not hold that against the Minister.
 I read the explanatory notes, which suggested to me the idea that the provisions might be mechanisms by which payment might be postponed. For instance, including someone whose interest in the house is 
 extinguished would create the right for him to live in the house for the rest of his life. I assumed, perhaps wrongly, that ultimately the enforcement authority would get its cash, although I accept that an element of interest might not be present in that. I may be wrong; I simply went by what I read in the explanatory notes. I think that the Minister's argument has more force, so I shall be sensible and partly agree with him. That is not how I read the clause, but perhaps I misunderstood it.

Bob Ainsworth: I thank the hon. Gentleman for his kindness. I had hoped that he would not notice the seam running through my argument, but that was too much to ask. I have outlined the circumstances, and now that he has received my clarification, perhaps he is less unhappy.
 The hon. Gentleman's amendment would instruct the court about what weight to give each of the factors. That would, arguably, conflict with the court's duty under the Human Rights Act 1998, since it is for the court to decide on its own proportionality, taking into account all the circumstances of the case. I hope that with his new understanding of the circumstances, he is prepared to withdraw his amendment.

Dominic Grieve: As a Christmas present of good will to the Minister, I shall say that by changing his argument half way through his speech he has persuaded me that I should not press the amendment to a Division. I shall reconsider the matter and decide whether we should return to it on Report. I concede that if the provision means that property may never be recovered, the proposed balance makes more sense. I had thought that the proposal was a method of postponement in arriving at the best way of recovery, and I felt that in those circumstances the rights of the individual should take priority over the rights of the enforcement authority. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Amendment made: No. 314, in page 157, line 16, at end add 
'and to any other relevant circumstances'.—[Mr. Bob Ainsworth.]
 Clause 272, as amended, ordered to stand part of the Bill.

Clause 273 - Payments in respect of rights under pension schemes

George Foulkes: I beg to move amendment No. 315, in page 157, line 27, leave out 'and' and insert 'to'.

Roger Gale: With this it will be convenient to take the following: Government amendment No. 316.
 Government amendment No. 317. 
 Government new clause 8—Consent orders: pensions.

George Foulkes: I rise to speak not only to give my hon. Friend the Under-Secretary a rest from the process of attrition that he has experienced during the past hour or so, but because if I did not get up soon, given the temperature in the Room, hypothermia would set in. I
 think that someone who was born in the same part of the world as the hon. Member for Lewes was must be in charge of the heating here.

Norman Baker: It is very bracing.

George Foulkes: None the less, I shall now move on to the amendments.
Clauses 273 to 275 provide that if recoverable property is lodged in a pension scheme, the value of the rights obtained with that recoverable property can be recovered by the director or by Scottish Ministers. The provisions on pensions are intended to close a possible loophole and deter abuse, as I think that I said a few days ago; or was it a few weeks ago? It seems like years. [Interruption.] I was a much younger man at the time.
 Clause 276 provides that recovery orders can be made on terms agreed by the parties. That reflects the fact that many civil actions are settled by agreement between the parties before the final hearing , as the hon. Member for Beaconsfield will be especially aware. The clause also reflects the experience of other civil recovery schemes around the world, which have found that civil recovery respondents, in common with other respondents in civil cases, do not always contest actions brought against them. 
 We always intended that recovery from pension schemes would be able to proceed with the consent of the parties involved. However, clause 276 as currently drafted does not cater for the particular requirements of pensions. The new clause and the three consequential amendments will remedy the defects. 
 New clause 8 is the key to the changes being made. It makes specific provision for cases in which an order reached with the agreement of the parties concerned under clause 276 involves pension rights. In the case of other types of property, once the court has made a recovery order, recoverable property will normally be vested in the trustee for civil recovery. The trustee is then required to realise the value of the assets vested in him. The Bill makes several detailed provisions as to how recovery orders will operate. 
 Rights in a pension scheme cannot be vested in the trustee for civil recovery in this way. They cannot be transferred to another person and subsequently sold, because they are neither a transferable nor a tradeable commodity. Therefore, clause 273 provides that the trustees or managers of the pension scheme must pay an amount equivalent to the value of the rights obtained with recoverable property to the trustee for civil recovery. The clause also allows for costs incurred by the pension scheme to be recouped. Clauses 273 to 275 make other necessary provisions relevant to pensions. 
 The Bill recognises that the recovery of rights in a pension scheme raises issues that require special provision. It is not prescriptive on consent orders under clause 276. It leaves the parties to the agreement to reach an outcome satisfactory to them and to the court. That will be an effective approach for most types of property, and will leave the parties a considerable degree of flexibility. However, when we were considering pensions, it was clear that it was not 
 appropriate to leave the arrangements completely at large. That is because any agreement reached will impact on the pension scheme and the pension scheme administrator. Consequently, it is necessary to apply several provisions that would apply in the case of a recovery order made under clause 267 to a recovery order made by consent. 
 New clause 8 will do that. It provides that when a recovery order is made by virtue of clause 276 and rights under a pension scheme are involved, the order may not provide for rights to be vested in the trustee for civil recovery. Instead, it provides that if the trustees or pension scheme managers are party to the agreement reached, the order may require a payment to be made in accordance with the agreement. It also provides that the trustee or scheme manager has the power to do that. 
 Additionally, the new clause makes provision for the recovery of costs by the trustees or scheme managers in the same manner as such provision is already made in clause 273. Finally, the clause applies aspects of clauses 273 to 275 that are relevant to recovery orders made by consent. 
 When the new clause is inserted into the Bill, it will appear after clause 276. Its insertion will necessitate some textual amendments to the other pensions clauses. Amendment No. 315 makes a minor change to the wording of clause 273, to take account of the addition of the new clause. Amendment No. 316 makes a minor change to clause 276. Finally, amendment No. 317 inserts a reference to the new clause in clause 276. The three amendments are therefore entirely consequential on the insertion of the new clause. 
 I should emphasise that it is anticipated that there will only be 15 to 20 civil recovery cases a year—which should be taken into account in debates on other parts of the Bill. Whether any of those cases will involve rights under a pension scheme will depend on the facts of each case. It seems unlikely, however, that the Bill will have significant implications for the pensions industry as a whole. If a civil recovery case involves pension rights, the new clause will ensure that it is possible for an agreement to be reached by the parties in a way that recognises the particular needs of pension schemes. 
 I hope that all Committee members are satisfied with those proposals, and that the hon. Member for Henley (Mr. Johnson) will send me one of his Christmas cards to thank me for explaining them, as he has been using his time in Committee so valuably by writing all his Christmas cards—as, indeed, have many other members of the Committee.

Roger Gale: Order. If the Chair were to notice any hon. Member doing anything like that, it would be ruled strictly out of order. Fortunately, at this time of year, the Chair has a tendency to exercise the Nelson technique.

Dominic Grieve: Thank you, Mr. Gale.
 The Minister's comments are welcome. I hope that what he has said about the effect on the pension industry is right. Most Committee members have to 
 declare an interest in Equitable Life. If it turns out that as a result of an action for the recovery of a sum under the provision, Equitable Life is tipped into complete insolvency, the Minister may regret his words. However, I accept what he has said, and I see no reason to dispute the amendments, although I look forward to reading them when they are incorporated in the text, as that makes it much easier to see the relationship between the clauses. 
 I have a query about costs, in connection with new clause 8. The Minister has touched on that matter, and I assume that the principle will be that the costs are recoverable from the pension fund or pension provider. Subsection (7) of the new clause states: 
 ''The order may provide for the recovery by the trustees or managers of the scheme (whether by deduction from any amount which they are required to pay in pursuance of the agreement or otherwise) of costs incurred by them in— 
 (a) complying with the order''. 
I assume from that that trustees are protected in the same way as they would be if the policy were surrendered in the usual manner, and that they are allowed to recover their costs, and to deduct them, in the usual way. That is my understanding, and if the Minister will confirm it, I will be satisfied.

Bob Ainsworth: That is also my understanding of the matter.
 Amendment agreed to. 
 Clause 273, as amended, ordered to stand part of the Bill. 
 Clauses 274 and 275 ordered to stand part of the Bill.

Clause 276 - Consent orders

Amendments made: No. 316, in page 159, line 38, leave out '275' and insert '272'. 
 No. 317, in page 159, line 39, after first 'and', insert 
'and sections 273 to 275 apply to such an order only in accordance with section [Consent orders: pensions]. 
 ( )'.—[Mr. Bob Ainsworth.]
 Clause 276, as amended, ordered to stand part of the Bill. 
 Clause 276, as amended, ordered to stand part of the Bill. 
 Clause 277 ordered to stand part of the Bill.

Clause 278 - Section 277: supplementary

Dominic Grieve: I beg to move amendment No. 404, in page 161, line 18, at end insert—
'(c)Any item of property representing the original property shall be known as related property.'.

Roger Gale: With this it will be convenient to take the following amendments: No. 405, in page 161, line 24, leave out '(the representative property)'.
 No. 396, in page 161, line 27, leave out 'representative' and insert 'related'. 
 No. 397, in page 161, line 30, leave out '(the representative property)' 
 No. 398, in page 161, line 34, leave out 'representative' and insert 'related'.

Dominic Grieve: I hope that I may be excused for this group of amendments. I am mindful of the fact that the Minister may tell me that I have got the whole thing wrong. The origin of the amendments was that, when I was reading clause 277 onwards, the terms used seemed mysteriously to turn into new terms as the clause progressed. In particular, ''related property'' turned into ''representative property'' half way through.
 There may be a good reason for that, but I found it all a bit muddling. By the time I reached the supplementary provision, I found it even more difficult to follow the relationship between related and representative property. Perhaps related property could turn into representative property, but in such circumstances, might it not be simpler to refer to it as ''related property'' throughout? 
 That is what I have tried to do with the amendments. If the Minister can give me a good reason why related property should undergo that metamorphosis into representative property, I shall happily withdraw the amendment. However, it is worth remembering that, especially in this context, the words are likely to become terms used in common parlance in legal discussion. Barristers will say, ''We are dealing here, your honour, with related property.'' If at all possible, the terminology should be maintained unless there is a good and sufficient reason why it should not be. 
 The Minister may be able to provide me with such an explanation, in which case I shall keep quiet and withdraw the amendment. On the other hand, he may believe that there is some sense in what I am saying—in which case, subject to what is in his script, he may go away and consider the matter further.

Bob Ainsworth: Two things worry me. The first is why my hon. Friend the Minister of State dismisses everyone's anxieties with such ease and reassures everyone in the Committee, while I seem singularly unable to do so. I shall go away over Christmas and reflect on his techniques.

George Foulkes: I do not want to interrupt my hon. Friend, but I assure him that the only reason is because he gallantly takes on the most difficult parts of the Bill, and leaves the easy ones for me, for which I am very grateful.

Bob Ainsworth: It is more than that. It must have something to do with the accent or the way in which my hon. Friend presents himself.

Mark Field: The reason is that it is clear that the Minister of State is simply reading from a civil service brief, and it is really out of sympathy that we decide not to press matters with him.

Bob Ainsworth: What a dreadful allegation.
 The other thing that worries me is that, just as the hon. Member for Beaconsfield read through the clause and became increasingly worried and decided to table the amendments, I read through the clause with the benefit of other people's advice. As the hon. Gentleman said, it is fiendishly difficult to understand. I shall try to reassure him, because at least I have come to an understanding of the concept of related property and recoverable property and the need to keep at least those two separate terms in the Bill. The matter is, perhaps, not quite as simple as he believes. In his amendments, he seems to have decided to turn his face against ''representative property'' and to try to replace it completely. I shall find out how far I can get in trying to assure him about this difficult aspect. 
 The amendments would insert a new definition of related property into the clause and would replace references in it to ''representative property'' with the term ''related property''. The clause defines some of the terms used in clause 277. It is intended to facilitate the operation of clause 277. The original property is, of course, the property initially obtained through unlawful conduct. That original property is then defined as being related to any representative property—that is, any property that has been obtained in place of the original property. Items of representative property are also related to each other, as well as to the original property. The model is, therefore, very much that of a family tree. 
 Related property, as currently defined in the Bill, is therefore different from representative property. Related property covers both the original and representative property. It took a while for the penny to drop with me, and the hon. Gentleman probably got there much more quickly than I did. The fundamental difference between related property and representative property is that related property encompasses the original property as well as representative property.

Dominic Grieve: I thought that related property was the property that was related to the original. I accept that the original property could be related to the other property.

Bob Ainsworth: I twisted myself into a lot more turns than that when I was trying to understand the provision.
 Clause 277 essentially seeks to regulate how the court will make recovery orders, if the enforcement authority seeks the recovery of property from different parts of the property family tree. That may include the original property, property that represents the original property, or any other representative property. All those are covered under the current definition of related property in clause 278. Clause 277 allows for the recovery of some of the related items of property, or a part of any of the related items of property, if that is what is needed to achieve the satisfaction of the director's rights to recover the original property. That would allow the recovery of some of the original property and some items of representative property. 
 The effect of amendment No. 404 would be that, for the purposes of clauses 277 and 278, representative property would become known as related property. 
 However, related property is already defined under clause 278 (1)(b). That definition would remain in the Bill, while representative property is already defined under clause 303. Under the amendment, clause 278 would contain two different definitions of related property, one of which included original and representative property, and one of which included only representative property. That would clearly be undesirable and confusing.

Paul Stinchcombe: In that case, I wonder whether it would be clearer if the words ''related property'' were put in brackets under clause 278(1)(b), mirroring the way in which representative property is referred to in subsection (3)(b).

Bob Ainsworth: I know that my hon. Friend is trying to be helpful—but as I stand here, I have to say that it does not feel that way.

Dominic Grieve: The hon. Member for Wellingborough (Mr. Stinchcombe) picked up exactly the point that sprang to my mind. The difficulty lies in the use of the phrases ''related to each other'' and ''related property''. If subsection (1)(b) had stated that the original property and any items of property that represent the original property are related to each other and are known as related property, all the mystery that has surrounded clauses 277 and 278 would have disappeared. I did not interpret the wording as meaning that. I thought, of course, that the two pieces of property were related to each other. The statement seems rather banal, in all the circumstances. The phrase ''related property'' sounds like a term of art, but then it appears and disappears. The Minister could solve that problem by amending subsection (1)(b).

Bob Ainsworth: The Minister is certainly not prepared to give such a commitment, because he fears that if he unravels all this he will create so many problems that will jump up in so many different parts of the Bill. I hope that my hon. Friend the Member for Wellingborough and the hon. Member for Beaconsfield will accept that. Given the explanation of the need for those two separate terms, and the acceptance that this is a fiendishly difficult matter to define and draft, I assure the Committee that if we can make it clearer, we will be happy to pick up those suggestions and do so. However, I cannot make a commitment here and now to make an alteration to a complicated part of the Bill when the consequences of doing so are not clear. I ask the hon. Gentleman to withdraw the amendment.

Dominic Grieve: I shall be happy to withdraw the amendment. The Minister has provided a clear explanation. At the risk of repetition, I must emphasise the fact that the problem lies in clause 278(1)(b), which the Minister said defined related property. However, when one reads it, it does not. It merely says that
''original property and items of property which represent the original property are related to each other.''
A definitions clause is needed for related property. Something that is murky and almost impossible to see through would thereby at least start to become opaque.

Bob Ainsworth: We shall consider that in the fullness of time.

Dominic Grieve: I am obliged. I beg to ask leave to withdraw the amendment.
 Amendment, by leave, withdrawn. 
 Clause 278 ordered to stand part of the Bill.

Clause 279 - Applying realised proceeds

Bob Ainsworth: I beg to move amendment No. 318, in page 161, line 41, at end insert
'or which he obtained in pursuance of a recovery order'.

Roger Gale: With this it will be convenient to take Government amendments Nos. 319 and 320.

Bob Ainsworth: The amendments are technical amendments to clause 279, which provides for what the trustee will do with sums that are in his hands as a result of his functions under the Bill. The amendments are intended to ensure that clause 279 refers to all of the circumstances in which money may be obtained by the trustee for civil recovery.
 As currently drafted, the clause applies to sums representing the realisable proceeds of property vested in the trustee by a recovery order, and sums directly vested in him by a recovery order. It also applies to the payment made to him following an agreement between the enforcement authority and the owner of associated property or an excepted joint owner under clause 271, and to the payment made to him in respect of rights under a pension scheme under clause 273. When recovery orders are made by consent under clause 276, we envisage that when a trustee is involved it will frequently be the case that the property or money in question can be paid over immediately, and that that can be provided for by the recovery order. However, a recovery order made by consent may need to make provision for the future transfer of property or money. Clause 279 needs to be drafted sufficiently widely to cover that. 
 The amendments therefore have the following effect. Subsection (1)(a) covers the sums that represent the realised proceeds of property vested in the trustee by a recovery order. Amendment No. 318 extends that to cover the realisable proceeds that the trustee has obtained in pursuance of the recovery order, but which have not been vested in him by a recovery order. That will cover property that the respondent agrees to transfer to the trustee under a recovery order made by consent, but is not vested in the trustee—that is, transferred to him by order. 
 Amendment agreed to. 
 Amendments made: No. 319, in page 161, line 42, at end insert
'or obtained by him in pursuance of a recovery order'.
 No. 320, in page 161, leave out line 43.—[Mr. Bob Ainsworth.] 
 Clause 279, as amended, order to stand part of the Bill. 
 Clause 279, as amended, ordered to stand part of the Bill.

Clause 280 - Victims of theft, etc.

Question proposed, That the clause stand part of the Bill.

Norman Baker: I seek clarification from the Minister about subsection (3)(b), particularly about the force behind the word ''immediately''. It is an interesting word to insert in the clause. Will the hon. Gentleman explain what it means? It seems that the intention is to protect someone who portrays himself or herself as a victim of crime. Obviously, it will be possible for property to be disposed of prior to a period that may be declared as ''immediately'', yet, in being so disposed of, not seek to make clear at that point what knowledge was in the mind of the person who was disposing of the property. I hope that I have put my point lucidly; the matter is complicated. Is not the word ''immediately'' redundant? Is it not unnecessarily limiting?

Bob Ainsworth: I shall try to pick up on the hon. Gentleman's point. Property that the person was deprived of must not have been recoverable property immediately before he was deprived of it. A declaration should not benefit someone who has stolen the property from its original owner but who, in turn, has had that property stolen from him. The property may have been transferred several times, but it is the immediate preceding situation that applies.
 Question put and agreed to. 
 Clause 280 ordered to stand part of the Bill.

Clause 281 - Other exemptions

Dominic Grieve: I beg to move amendment No. 399, in
 page 162, line 22, leave out subsections (1), (2) and (3). 
 Who are the categories of individuals in respect of whom it is envisaged that the Secretary of State or the Scottish Ministers may say that recovery should not take place? The measure is clearly in the Bill for a purpose. Surely, on the whole, justice is not about administrative convenience. Who are the categories of individuals from whom it is thought that the Secretary of State may designate that no recovery should occur?

Bob Ainsworth: The civil recovery scheme has been constructed on the basis that, in general, there should be no exemptions from civil recovery proceedings, other than those set out under clause 306. In many cases, when a person holds recoverable property, it will not be appropriate to bring civil
 recovery proceedings. However, instead of trying to set out a comprehensive list of those cases, which would be impossible, the intention is to rely on the enforcement authority's discretion about against whom it brings proceedings.
 Both the director and Scottish Ministers are public bodies for the purposes of the Human Rights Act 1998. They must therefore act proportionately in deciding which cases to bring. In addition, the director is under a duty—as we have discussed earlier—to act efficiently and effectively. There is, however, a small category of cases in which it is felt that there is compelling evidence for an exemption from civil recovery proceedings. That clause sets out those exemptions. We arrived at such exemptions after consultation with other Departments and relevant bodies. 
 One of the main exemptions is with regard to the Financial Services Authority as it is possible that it will hold recoverable property after it has, for example, levied a fine on a company engaged in market abuse. As one of the statutory objectives of the FSA is to reduce financial crime, it would be counter-productive to bring proceedings against that body. Although the consultation was extensive, it is possible that new circumstances may arise in future when there is a compelling case for an exemption and when relying on the enforcement authority's discretion is not sufficient. That is why we have included the order-making power. It will be subject to affirmative procedure if it is used, and I hope that that reassures the hon. Member for Beaconsfield. I hope that I have reassured him that that power should be held in reserve.

Dominic Grieve: The Minister understands my slight concern. It is often administratively convenient for Departments to interfere with the ordinary course of justice. We are setting up a judicial process, and we have suddenly discovered exemptions in the clause that might be simply for administrative convenience. The reassurance on affirmative resolution is helpful. I am not sure that I wholly agree that the FSA should hold money that proceeds from unlawful conduct. As a philosophical issue, I do not understand why it should not hand that over, although it might be argued that that would be robbing Peter to pay Paul.
 The Minister has provided an explanation, and I did not previously feel that I had one. I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 281 ordered to stand part of the Bill.

Clause 282 - Compensation

Dominic Grieve: I beg to move amendment No. 400, in page 163, line 16, at end insert—
 ''(1A)If any other person has suffered loss or damage as a result of an interim receiver or interim administrator dealing with his property in the reasonable but mistaken belief that he was entitled to do so in pursuance of an interim receiving order or interim administration order, such person may apply to the court for compensation.''
 The amendment returns us to last week's debate on the position of a person who suffers loss and damage as a result of the interim receiver or administrator. If that person could not show that the receiver or administrator had been negligent, he would not have a right of recovery. The Minister may remember that debate, and I said during the proceedings that I felt gently in my mind that I had an amendment coming on. The amendment would enable such a person to be included in the compensation categories. I do not want to repeat the arguments that I deployed at length last week, which expressed my concern that such a person was not covered. 
 The state, and Parliament, can set up a system that may lead to an individual's being innocently caught up in the receivership process, and suffering loss. The receiver may have acted perfectly reasonably but accepts that he has made a mistake. He inadvertently interfered with the property of an innocent person, causing him loss. My view is that such a person should be included in the compensation framework and should be able to claim compensation like the other individuals who are able to under the clause. The amendment would allow that to happen, and I commend it to the Committee.

Bob Ainsworth: The protection provided to receivers under clause 252(3) is intended to prevent potential receivers from being deterred from receivership in several types of recovery cases. As I explained when we discussed the amendment tabled to clause 252, it is a protection commonly provided for receivers. Obvious models for clause 252(3) are found in the Insolvency Act 1986, in section 2, page 74. The official receiver is provided with similar protection if he causes loss or damage in seizing or disposing of property that he has reasonable grounds for believing to be part of the estate. The same provision is made in section 304(3) of the 1986 Act for the trustee of a bankrupt's estate. Such provision also currently applies under the Criminal Justice Act 1998 and the Drug Trafficking Act 1994 to receivers appointed in criminal confiscation cases. The provision is replicated for criminal confiscation cases in clause 61 of the Bill. That newfound injustice exists in other legislation. I am unaware that it causes difficulty or has caused difficulty in the past under the various pieces of legislation enacted by the party to which the hon. Gentleman belongs.
 The amendment approaches the issue from another direction. If the receiver is not liable the amendment seeks to ensure that another party, in other words the enforcement authority, is liable. It does not seem appropriate that the director should be liable for the actions of an interim receiver or an administrator in those circumstances. The interim receiver is appointed by the court and is a creature of the court. He does not act on behalf of the director or Scottish Ministers. It would be odd if the enforcement authority could be required to pay compensation in relation to a property that had never been subject to an interim order, as a result of actions by a receiver over whose actions it had no control.
 I fully understand the concern that people who are entirely uninvolved in the civil recovery procedures may suffer loss and not be eligible for redress. It may be that the property would normally be covered by their insurance and that there would not therefore be any loss. Even if that were not the case, I am not persuaded that the enforcement authority should be liable to pay the compensation. I have, however, noted the concerns expressed and I will look into the position to see whether an additional measure of protection should be afforded to those affected by the acts of the interim receiver. I am conscious that the law on receivers is well established and that it is important to take full account of existing precedents. I cannot, however, make a commitment to table a Government amendment on that point. Against that background, I hope that the hon. Gentleman will withdraw his amendment.

Dominic Grieve: I am grateful to the Minister for considering the matter further. The issue will not go away. It is ultimately the state, through the enforcement authority, that decides to embark on the process. That differentiates it from receivership in ordinary civil litigation. The state decides to take a meddling role in ordinary civil relations for justified social and policy reasons. If as a result the property of a wholly innocent party is interfered with, it is extraordinary that he should not have the right to go to court to claim by a simple method reasonable compensation for his loss. It should not be left to the lawyers to go off into complex civil litigation. At the moment I cannot even see a valid target in view of the protection given to the receiver.
 As an issue of principle it is quite wrong to allow the situation to persist. I will withdraw the amendment but I do so in the hope that the Government will table an amendment on Report; if they do not, we will return to the matter then. I accept that someone other than the 
 enforcement authority may have to pay, but ultimately the state will have to pay. It is the state's procedure that would lead to the situation in the first place. 
 I beg to ask leave to withdraw the amendment. 
 Amendment, by leave, withdrawn. 
 Clause 282 ordered to stand part of the Bill.

Clause 283 - Northern Ireland: interpretation

Amendments made: No. 345, in page 163, line 42, leave out 'the High Court' and insert 'courts'. 
 No. 346, in page 163, line 43, leave out 'Chapter' and insert 'Part'. 
 No. 347, in page 164, line 1, leave out from 'court' to end of line 2.—[Mr. Bob Ainsworth.] 
 Clause 283, as amended, ordered to stand part of the Bill. 
 Amendment made: No. 348, That Clause 283 be transferred to the end of line 21 on page 178.—[Mr. Bob Ainsworth.] 
 Clauses 284 to 287 ordered to stand part of the Bill.

Roger Gale: I wish all members of the Committee, and the staff of the House, a happy Christmas and a peaceful and healthy new year. I remind hon. Members that we shall sit again on 8 January 2002, in the afternoon only.

Anne McGuire: May I ask you to use your good offices to make arrangements for better heating in this Room, so that we can all see the Bill through to the bitter end, Mr. Gale? Otherwise I will be forced to spend the holidays gathering peat.

Roger Gale: The point is well taken. I will see what I can do.
 Further consideration adjourned.—[Mrs. McGuire.] 
 Adjourned accordingly at one minute past Seven o'clock till Tuesday 8 January 2002 at half-past Four o'clock.